Foreign owner tax surcharges killing retirement living development

A retirement living executive has revealed foreign owner surcharge taxes are stopping them from developing more villages.

As the table above shows, NSW imposes an additional 14% through Foreign Surchage Purchase Duty and Foreign Surcharge Land Tax, with Victoria adding 12% to a land purchase for foreign overseas. This is on top of the standard stamp duty/land tax charges that other buyers pay.

Michelle Bruggeman, Levande’s Chief Operating Officer, told the Property Council's Retirement Living Outlook last week that the operator, owned by Swedish global investment organisation EQT, has six ongoing development projects in NSW but “we could easily double that quite easily tomorrow” but for the additional 14% taxes imposed in NSW.

“There’s a thousand units that we will deliver and drop in the next two to three years. We could be doing more in New South Wales, however there are large planning delays here and heavy Foreign Owner Land Tax Surcharges and Foreign Owner Stamp Duty costs that make many Retirement Living projects unviable in NSW,” Michelle said.

“Look, in real layperson’s terms, there’s exemptions from foreign owner surcharges for some sectors, for example Student Accommodation. There’s exemptions for caravan parks. There’s not exemptions for Retirement Living. So we cannot buy land, build villages and supply enough retirement living units to meet the demand in NSW.

"Even with a thousand coming down the line in the next two to three years, we could easily double that quite easily tomorrow. But when you put a foreign owner surcharge on top of the land acquisition costs it makes things very challenging and I’ve come from a student accommodation background, so I get it. So when you put $9 million onto a $65 million acquisition, you’re talking 14% of surcharges which would ultimately be passed on to local residents.

“It’s a deep hole. It makes it unattractive. It only gets passed through to the buyers. It’s not healthy.”

The Weekly SOURCE is aware that many representations have been made to the NSW and Victorian Governments to reduce the foreign ownership surcharges for retirement living developments.